Justice Department alleges fraud, breach of contract with vetting company

By Greg Grisolano, Land Line staff writer | Thursday, January 23, 2014

“Shelves are as clean as they could get. Flushed everything like a dead goldfish.”

That’s how an April 30, 2010, email described the situation at US Investigations Services, where the company contracted to do background checks on U.S. government workers and independent contractors routinely pushed through background checks that had not undergone a thorough review, according to a lawsuit filed by the U.S. Justice Department on Wednesday.

The email is part of a 25-page filing in U.S. District Court in Alabama, which accuses USIS of defrauding the U.S government out of millions of dollars through improper background verifications. As of deadline, a USIS spokesperson had not responded to multiple email requests and a phone request for a statement or response to the lawsuit.

The company is facing three counts of false or fraudulent claims, false statements and breach of contract, involving more than $11.7 million in bonuses the company received for its performance. The Justice Department is alleging the Falls Church, Va., firm failed to perform quality control reviews in connection with its background investigations.

USIS had been contracted to provide background screenings by the Office of Personnel Management, which is responsible for current and prospective federal employees or contractors to various federal agencies, including the Justice Department; the Defense Department; Treasury; Health and Human Services; and the Department of Transportation.

USIS may also be familiar to truckers, as it completed a $249 million buyout of HireRight Inc. in 2008, creating one of the largest employment screening companies in the world, according to statements made by both at the time of the acquisition. The company’s commercial services are marketed under the HireRight brand.

The suit outlines a scheme by which workers in the Western Pennsylvania branch would use “Blue Zone.” The software program allowed the user to identify a large number of investigations, to quickly make an electronic “Review Complete” notation indicating that the files had undergone review even if they had not, and then to automatically release the files to OPM with the “Review Complete” notation attached.

The background investigations were represented as complete “when, in fact, one or more of the (reports of investigation) had not received a quality review as required by the Fieldwork Contracts,” the suit stated.

Between March 2008 and September of 2012, The Department of Justice estimates that the company filed at least 665,000 flawed background checks, which is about 40 percent of the total submission. USIS had been providing background checks to the federal personnel office since at least 1996, and a 2011 contract signed between the agency and the company remains in effect today, according to the suit.

According to the Justice Department’s suit, internal documents confirm USIS “senior management” were aware of and directed the dumping. An email chain from Sept. 16 and Sept. 17, 2010, involving USIS’s vice president of field operations and its president of investigative services among others, discussed the need to dump cases to meet revenue goals. Neither of the executives are identified by name in the filing.

“The Vice President of Field Operations referenced USIS’s revenue situation as ‘[w]e all own this baby, and right now we are holding one ugly baby,’” according to the filing.

The investigations that were dumped included most government agencies, including the Departments of Justice; Homeland Security; Health and Human Services; the Department of Transportation; Department of Treasury; Department of Defense; and the Defense Intelligence Agency.

The U.S. Office of Personnel Management originally raised concerns in a letter to USIS dated April 4, 2011. According to the agency’s analysis, a small group of USIS employees were identified as having released a substantial number of cases when compared to the workload of other reviewers. The analysis also showed a large number of reports of investigation were identified as “Review Complete” when “the metadata revealed that the report had never been opened by a USIS Reviewer.

The company blamed the problems outlined in the April 2011 letter on “a variety of software problems and glitches” according to the suit. The suit also accuses USIS executives of going back and removing the flags or deficiencies on background checks that were sent back to the company by the personnel office for being deficient.

The case originally stems from a whistleblower suit filed by former USIS employee Blake Percival in July 2011. Under the provisions of the whistleblower portion of the False Claims Act, Percival is entitled to receive a share of any funds recovered through the lawsuit. The U.S. government interceded in the lawsuit on Oct. 24, 2013, and is asking to recover three times its damages, plus civil penalties.